A sunken boat lies submerged in front of an oil rig after Hurricane Harvey hit Port Aransas, Texas, on Aug. 27. (MARK RALSTON/AFP/Getty Images)
Mother Nature has continued to wreak havoc on the southeast United States, as recovery from Hurricane Harvey is being overshadowed by Hurricane Irma. While it’s always difficult to discuss business impacts when you have a natural disaster such as this, it is our job to opine on those impacts, understanding first and foremost we are concerned with the health and safety of those impacted.
Here’s our assessment of the impact on energy operations.
As we look at the big picture, crude oil production fell, but not as much as refinery demand and exports, which led to builds in crude oil and draws of refined product. A variety of midstream companies have provided updates on operations and the punchline is there has been very minimal damage and operations have either restarted or in process of restarting at various facilities. This is consistent for producers, with crude oil and natural gas production coming back on line as well
As we have mentioned previously, the brunt of the impact remains at the refiner level and reports have indicated there is still a decent amount of capacity offline, although that is expected to drop substantially in the coming days.
From a refinery perspective, Corpus Christi appears to be in relatively good shape, Houston in decent shape and moving northeast, Beaumont/Port Arthur in the worst shape and likely will take the longest to recover.
In summary, operations are returning to normal for energy companies and based on preliminary reports, the impact is likely to be transitory in nature.
As this massive hurricane barrels through Florida, we anticipate very little impact on oil and gas producers, virtually no impact on refiners and a localized, yet relatively large impact on natural gas demand as Florida is a large consumer for natural gas fired power generation.
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